State-sponsored Research as a Vital Economic Investment

For over a decade, a joke widely told in academic circles described public universities in the U.S. as moving from being state-supported to state-assisted to state-located. Unfortunately this joke, now reflecting a cruel reality, is no longer funny.

Even during the economic boom times of the 1990s, a trend emerged that diminished dramatically the fraction of state budgets allocated to the support of public universities. In response, research universities sought other sources of financial support through aggressive pursuit of federal government grants, contracts with private industry or private philanthropy. As a result, smaller and smaller fractions of university budgets were derived from state appropriations.

At the same time, many states have asked their university students to step up to make a larger fractional contribution to the costs of their education through rapidly accelerating bills for tuition and fees. In fact, given the reality that the average American college graduate will earn over a lifetime about $1 million more than the average high school graduate, some people rationalize this shift by asserting that public education should be regarded as a private rather than a public good, receiving an even smaller tax subsidy than is currently enjoyed.

Even the most strident supporters of the privatization of public education, however, recognize the beneficial effect of state investment in research on local economic prosperity. More and more frequently, business leaders realize the value of developing a sufficiently high local density of talent necessary to support clustered economic growth. Not only do public research universities attract external financial support, whose impact is multiplied many times over, but they also enhance the availability of a well-trained, constantly replenishing pool from which to select a workforce, thus attracting businesses from other regions.

Research universities are effective both in spawning new businesses and creating technically sophisticated jobs. Besides conducting long-term discovery-based research that creates new industries and new methods for sustaining existing ones, research universities provide expertise that is of inestimable immediate value to local businesses and government. They also develop new intellectual capital to be used as the basis for the small- and medium-size business startups that contribute so strongly to economic growth.

Because our best public universities act as magnets for talent, and because their students often remain in this intellectually stimulating environment after they graduate, a first-rate research university enhances a community's chance of attracting, birthing and retaining the most innovative entrepreneurial firms. Thus, clusters of innovation that surround research universities provide attractive opportunities for talented young people who might otherwise leave the state. And perhaps most important, as the new startup firms move from research to commercialization, our research universities enhance the probability of success for production facilities dispersed around the state.

It is clear that research universities are strong contributors to local and regional quality of life. Their sustenance should therefore be readily accepted as an economic imperative for investment in every state. Even though many states now face signficant budget shortfalls that are likely to persist into the next fiscal year, a likely solution to this malaise will lie in replacing untrained-labor–intensive jobs with innovative knowledge-intensive industries. In such times, state leadership in providing economic stimulus for recovery is a crucial and highly appropriate response, both economically and politically.